The Great Computer Chip Shortage

[Garuda]

The pandemic and an ongoing drought in Taiwan has caused the supply of semiconductors to crash. This has caused automakers to cut production and a lack of supply of computer hardware (GPU's) and gaming consoles.

https://www.marketwatch.com/story/w...ood-news-for-semiconductor-stocks-11614020156

A global shortage of semiconductors has pushed chip stocks to record highs, and analysts expect that chips will continue to be in short supply at least through the end of the year as COVID-19 pushes the world further into the digital realm and the industry struggles to keep up with demand.

Chips have been hard to come by for auto makers and consumers, causing difficulties in a range of industries. The cause seems to be a combination of increased demand as people scooped up electronics during the COVID-19 pandemic, limited manufacturing capacity to meet that demand, and the U.S.-China trade war.

Maribel Lopez, principal analyst at Lopez Research, told MarketWatch in an interview the chip industry is facing “a perfect storm” of demand and supply issues that is unlikely to resolve soon.“Unless we have a major economic meltdown, which is obviously possible, one of the things that’s happening right now is that almost anything you buy is going to have a chip in it,” Lopez said. “You can’t buy a dumb product.”
While high demand for mobile-device chips in 2020 was expected, the surge in demand for PC-based chips was not, she said. The trend of shrinking chips down to where they can fit in places they haven’t been able to fit before has made the manufacturing process more complex, Lopez noted. The pandemic took those trends and placed an added level of volatility on the supply chains and manufacturing practices dealing with them. The full impact of the chip shortage, however, didn’t hit home to the wider market until General Motors Co. GM, 2.26%, Ford Motor Co. F, 2.86% and other auto makers said recently they’ve had to shut down production on certain models because of a lack of semiconductors. Amid growing concerns from industry leaders, President Joe Biden is set to sign an executive order Wednesday calling for the review of critical U.S. manufacturing supply chains that may rely too much on China, particularly those involving chips and high-capacity batteries.

https://www.reuters.com/article/us-taiwan-drought-semiconductors-idUSKBN2AO0G3

Taiwan chipmakers are buying water by the truckload for some of their foundries as the island widens restrictions on water supply amid a drought that could exacerbate a chip supply crunch for the global auto industry.

Washington is now seeking $37 Billion to boost domestic manufacturing. Obviously, this has exposed the biggest weakness in the defense industry and military capabilities.

https://www.reuters.com/article/us-...ip-manufacturing-amid-shortfall-idUSKBN2AO13D

President Joe Biden said on Wednesday he would seek $37 billion in funding for legislation to supercharge chip manufacturing in the United States as a shortfall of semiconductors has forced U.S. automakers and other manufacturers to cut production.
Biden also signed an executive order on Wednesday aimed at addressing the global semiconductor chip shortage that has alarmed the White House and members of Congress, administration officials said.

The scarcity, exacerbated by the pandemic, was also the subject of a discussion between Biden and a bipartisan group of U.S. lawmakers at the White House on Wednesday.

“I’m directing senior officials in my administration to work with industrial leaders to identify solutions to the semiconductor shortfall,” Biden said on Wednesday. “Congress has authorized a bill but they need ... $37 billion to make sure that we have this capacity. I’ll push for that as well.”

The White House said his remarks were in reference to measures aimed at boosting chip manufacturing capacity that were included in this year’s National Defense Authorization Act but which require a separate appropriations process to garner funding.


The chip industry has pressed the Biden administration and Congress to take action to fund the provisions of the law. “We urge the president and Congress to invest ambitiously in domestic chip manufacturing and research,” the Semiconductor Industry Association (SIA) said earlier on Wednesday.

Biden’s executive order launched a 100-day review of supply chains for four critical products: semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceuticals.

The order also directs six sector reviews, modeled after the process used by the Defense Department to strengthen the defense industrial base. It will be focused on the areas of defense, public health, communications technology, transportation, energy and food production.

The United States has been besieged by supply shortages since the onset of the pandemic, which squeezed the availability of masks, gloves and other personal protective equipment, hurting frontline workers.

 

[Handsome Creepy Eel]

Can someone explain in an idiot-friendly tone why chip manufacturing uses so much water?

 

[homersheineken]

Can someone explain in an idiot-friendly tone why chip manufacturing uses so much water?

They're thirsty simps like most of the population. Explains why they have so much internet porn

 

[Aizen]

Surprise, surprise. Outsourcing all of your manufacturing comes to bite you in the ass when there's a shortage. Who would have ever thought?

 

[Garuda]

Can someone explain in an idiot-friendly tone why chip manufacturing uses so much water?

Semiconductors are layered onto the silicon chip and the whole thing requires washing after each layer is applied. So yeah they are about as thirsty as your average simp.

 

[Max Roscoe]

Chip shortage: Toyota to cut global production by 40%

The world's biggest carmaker will cut output in September, while VW warns it may have to make further cuts.

www.bbc.com

Toyota is cutting its worldwide auto production almost in HALF.
This is HUGE.

In 2013 they produced over 10 million cars. That's a lot of steel and electronics and tires and work hours.

The story above claims it is because the pandemic increased demand for phones TVs and gaming consoles.

I find that really hard to believe for anything except video games. I can see people wanting to play more video games when they are stuck at home all day. But everyone I know had plenty of huge flat TVs already. And most people seem to buy a new phone every 2 years. But somehow the demand for those products is suddenly so great it's causing millions of cars from not being made?!?

But maybe that is indeed what's happening:

Global chip shortage: Samsung forecasts 53% jump in quarterly profit

Demand for electronic components has surged as people are shifting more of their lives online.

www.bbc.com

Anyway, when did industries such as auto manufacturers (along with hundreds of others) become so fragile?
And why can't more chips be made?

Some things just really don't make any sense at all, like the "coin shortage" despite huge numbers of people staying at home and making non-cash purchases, while the production of coins and dollars did not not fundamentally change, or the weird continuing shortage of toilet paper. If anything it seems we would have a surplus of TP since everyone has reams of it at home already.

Shout Stain remover is still unavailable in the USA, despite being made from 4 household products you can cheaply purchase.

So strange.

Is the world really this dumb and easily disrupted?

 

[Matthewww]

I don't want to get too conspiratorial, but I suspect the chip shortage is just a cover story, and excuse for supply disruptions of new vehicles. I think they're retooling auto factories to produce more electric vehicles. There's an openly stated goal of having 40-50% of vehicles be electric or plug-in electric vehicles by 2030. Car companies are going to have to massively increase production of these things in the next 8-9 years to meet that goal, and they're not going to be able to do it without disrupting production. Only a few percent of sales are electric/plug-in electric right now. Shutting down 40% of Toyotas assembly lines gives them an opportunity to retool 40% of their assembly lines for new car models.

 

[Elipe]

Is the world really this dumb and easily disrupted?

... Yes. Yes, actually. Did you think it was really just a meme when people used to talk about how even a tiny group of like 10 - 100 men could completely shut down a Western country by targeting electrical infrastructure points?

 

[Garuda]

Some things just really don't make any sense at all, like the "coin shortage" despite huge numbers of people staying at home and making non-cash purchases, while the production of coins and dollars did not not fundamentally change, or the weird continuing shortage of toilet paper. If anything it seems we would have a surplus of TP since everyone has reams of it at home already.

Shout Stain remover is still unavailable in the USA, despite being made from 4 household products you can cheaply purchase.

So strange.

Is the world really this dumb and easily disrupted?

The coin shortage is due to people not putting coins back into circulation as everything required "contactless" payment during the pandemic. I think that is the only shortage that has somewhat of a good explanation.

To answer your question, yes.

 

[Sooth]

I don't want to get too conspiratorial, but I suspect the chip shortage is just a cover story, and excuse for supply disruptions of new vehicles. I think they're retooling auto factories to produce more electric vehicles. There's an openly stated goal of having 40-50% of vehicles be electric or plug-in electric vehicles by 2030. Car companies are going to have to massively increase production of these things in the next 8-9 years to meet that goal, and they're not going to be able to do it without disrupting production. Only a few percent of sales are electric/plug-in electric right now. Shutting down 40% of Toyotas assembly lines gives them an opportunity to retool 40% of their assembly lines for new car models.

Not true. I have friends in procurement for an EV company - they can't get anything either. Silicone chip manufacture is extremely specialized and as soon as you mess with only one part of the manufacturing chain the whole lot stops. If it does start again it's for the company that can place the biggest orders.

Silicone chips are the opposite to a commodity product.

This is why Tesla has taken IC manufacturing inhouse, which is absurd for an automaker, but Tesla is not your standard auto maker.

 

[Sooth]

"Clean Tech" (climate change) is the universally agreed upon strategy for keeping *the machine* going.

The collective world economy has to always be doing something to create value otherwise it falls over.

So at the moment we have "go to space" and "stop pollution".

I personally think the first one is a waste of time/money because where you take the sons of Adam you're just expanding the simulation of God in 3D space which is a joke when you're in a higher dimension.

But I can get behind the second one. Diesel trucks are slow and stinky and only 30% efficient. Going to clean tech is akin to moving to crypto - Decentralization is possible.

 

[MKE-Ed]

The coin shortage is due to people not putting coins back into circulation as everything required "contactless" payment during the pandemic. I think that is the only shortage that has somewhat of a good explanation.

To answer your question, yes.

This is something that I, too, have noticed. Within the past two weeks, when I go shopping for groceries at my local area large chain grocery store, the entire section where they have bottled water and the various blends of Gatorade drinks have been empty. This is a large section of store shelf’s in that aisle.

 

[infowarrior1]

Surprise, surprise. Outsourcing all of your manufacturing comes to bite you in the ass when there's a shortage. Who would have ever thought?

Efficiency and redundancy are opposites in many ways.

 

[Max Roscoe]

I don't doubt that the shortage actually *exists*. I'm just flabbergasted that no one in the entire world is doing anything about it.

As for the coin thing, digital purchases don't explain it. Every purchase is two-sided, with a buyer and a seller. If buyers are not paying with coins, sellers are also not taking coins, so the increase in digital purchases should have no effect on coins overall. In other words if 60% of purchases were made in cash before, and today it's only 20%, yes you are dealing with 1/3 as much currency as you were before but also cash transactions are 1/3 of what they used to be so the overall effect is nill.

The Shout stain remover thing is a good example because it is made of:
Dish soap
Water
Ammonia
You can buy all of these things in bulk. But you cannot buy stain remover, and in two years no one has figured out how to commercially do so.

If no firm is mixing these three things together and selling it as stain remover, because of whatever supposed bottleneck they are facing, then I also believe no firm is making silicon chips when the warehouse says they are out of silicon chips.

But how is this even possible that the world is this fragile. This isn't even fragility, it's downright stupidity.
If the world breaks down this much over a slightly virulent flu, then all the fearmongering about EMPs or global warming or the sea water rising one inch or a gas embargo seem justified after all because society would absolutely end under any of those much more extreme catastrophes.

Perhaps the incentives of money no longer work in the global monopolist environment, because classical economic theory teaches that someone will come along and make stain remover or chips in order to earn excess profits, but that just isn't happening. The corporations, as we have seen with the woke agenda, don't really need profits, after all.

 

[dieterpatrickgill]

How long will the chip shortage last? Building a new semiconductor fab is not that easy ( at least 9 months?) and ramping up manufacturing after that will also need like another 9 months or so.
My main concern is graphic card, as it is needed to build good PC.

Can someone explain in an idiot-friendly tone why chip manufacturing uses so much water?

Mainly to cool down the silicone crystallisation process. Czocharlski process or pulling from the melt is a very energy intensive process. The melting point of silicone is 1412°C or 2573.6°F
And please don't blame Taiwan, there is only so much they can do with their current capacity

Toyota is cutting its worldwide auto production almost in HALF.
The story above claims it is because the pandemic increased demand for phones TVs and gaming consoles.
I find that really hard to believe for anything except video games. I can see people wanting to play more video games when they are stuck at home all day. But everyone I know had plenty of huge flat TVs already. And most people seem to buy a new phone every 2 years. But somehow the demand for those products is suddenly so great it's causing millions of cars from not being made?!?
Anyway, when did industries such as auto manufacturers (along with hundreds of others) become so fragile?
And why can't more chips be made?
Is the world really this dumb and easily disrupted?

Yes, Max. Consumer electronics are more profitable, they are willing to pay more than automobile manufacturer and have a better condition on contracts too. Auto manufacturers are using Toyota's Just In Time system mostly blindly and has a very short term goals. They squeezed their suppliers dry including chip manufacturers. Toyota have anticipated the shortage earlier and bought a huge stock of chips, now that inventory is depleted. The short answer is the world is not dumb but greedy. Short term profit makes them fragile.
Next time treat they need to treat their suppliers like partners not like slaves.
As people spending more time at home, demand of consumer electronics of all kind are increasing. Online schooling means more smartphone, tablets and yes also new TV, not only game consoles. Remember crypto-currency? Yes, they run on GPUs.

 

[Garuda]

Aside from the fact that semiconductor makers cannot obtain the high grade neon gas from Ukraine, they might have another problem as a coolant plant shut down due to environmental regulations.

 

[Looger]

Besides "bleeding edge" electronics, best video card, fastest computers, etc. there is a more pressing need - the basics of a formerly-western technological country's economy without Chinese support. You don't need a graphics card to run a tractor.

ASIC jobs I see once in a while, but what's really needed is small-scale, small-numbers low-level (not NASA not KLA-Tencor) / "research" or educational semiconductor labs. Think 1970s, 1980s but modernized within reason.

We almost got something like this in Calgary in the 90s, between DeVry and a few local businesses (probably NorTel, Novatel, Computing Devices Canada).

Something in between the mega labs in Asia, and the maker spaces like Protospace (Calgary).